Greenheart Group Ltd., a unit of tree-plantation operator Sino-Forest Corp. (TRE), applied to resume trading in Hong Kong today after giving more details about its operations in Suriname and its ties to the parent.
Hong Kong’s Securities and Futures Commission ordered the Hong Kong exchange to suspend the shares on Aug. 29 after it raised questions about the expiry of a logging license in Suriname, Greenheart said in a regulatory filing yesterday. The SFC continues to investigate, Greenheart said.
“The SFC was concerned this matter was not disclosed in the company’s announcement to the Stock Exchange on 9 June 2011,” said Greenheart. The logging license was eventually renewed on Sept. 2, the company said. Greenheart said it denies assertions raised in South China Morning Post article about the “validity and legality” of the company’s Suriname operations.
Greenheart has fallen 69 percent in Hong Kong trading since June 1, the day before short seller Carson Block’s Muddy Waters LLC alleged Sino-Forest, based in Hong Kong and Mississauga, Ontario, overstated its China timber holdings. Sino-Forest, which owns 63.6 percent of Greenheart, denied the allegations and established an independent committee to probe the accusations.
Yesterday, Greenheart said that Chief Operating Officer Andy Fyfe and Chief Financial Officer Daphne Tse, neither of whom are connected to Sino-Forest’s directors or shareholders, run the company day-to-day. Only Chief Executive Officer Judson Martin and Simon Murray also sit on the parent’s board.
Other ties to the parent include joint ownership of Greenheart Resources Holdings Ltd., its western Suriname unit, held 60.4 percent by the company and 39.6 percent by Sino- Forest, according to yesterday’s filing. Greenheart sells logs to a Sino-Forest unit, and the parent has loaned $40 million loan to a Greenheart unit.
The Ontario Securities Commission, Canada’s main securities watchdog, suspended Sino-Forest shares on Aug. 26. The OSC said some officers and directors of Sino-Forest may have engaged in acts “related to its securities” that they “knew or should have known” perpetuated a fraud.
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